Balancing Your Checkbook

Did you know part of good financial practices is balancing your checkbook?  YES, even with digital and mobile banking, best practices are to balance your account once a month.

So what does it mean to “balance your checkbook”?

When we say “balance your checkbook” that means to keep a record of your transactions, review the activity in your account, and verify everything matches…simple as that!  Prior to online and mobile banking, you would write down all the transactions coming into your account (things like direct deposits, payroll, and deposits made with a teller at the bank) and all the transactions going out of the account (checks written, recurring monthly payments, ATM withdraws, debit card purchases, etc.) in a paper checkbook register.  When your statement came at the end of your cycle, you would match up the transactions on the statement with the items written in your register.  Sometimes this is also called “reconciling the account”, which means the same thing at “balancing”.

So how do you “reconcile” or “balance” your account now?  It’s simple and here are 3 easy steps to help you!

Step 1: Keep a Record of All Transactions (Everything Going In and Out of the Account)

It’s easy to swipe your debit card or click a button online and make a purchase from your account, but make sure you keep a record of the date and amount of your purchase.  If you don’t want to use a paper register, you can make a digital record with a spreadsheet or you may prefer to reconcile your accounts utilizing programs such as Quicken* or Quickbooks* or other similar apps. There are many apps available for your phone, or you can create a spreadsheet in Excel or another computer program.  To create a digital register, you will need columns for date, description, money in, money out, and balance.

How often should you write them down?  Ideally, whenever you make a purchase you should write down the transaction.  Sometimes that isn’t practical so save your receipts and set aside a time to review your register and update any transactions you have missed.

What about deposits?  If you know deposits are coming into your account, you can include them on the register the day they should be deposited.  Apply the same principal if you have recurring digital withdraws (things like your phone, electric, or water bills).  If the amounts differ month to month, you will have to check the amount with the company withdrawing the money or verify it on your statement.

Step 2: Review your Bank Account Statement

The next step is comparing your written record of transactions with what the bank shows.  At the end of your statement cycle, you will receive a bank statement showing all the transactions to your account.  Sometimes this comes in the mail, through email, or in a downloadable file from your online banking.  Compare your record to the bank’s record and note any differences.

Step 3: Adjust for any Differences and update your balance

If you have any differences between the bank statement and your register, update your register now.  You might have forgotten to write in a transaction or the amount may have been written incorrectly.  Once all the transactions are entered in your register, calculate your new balance by adding all the credits and subtracting all the debits.  Write down your new balance in the far right column.

That’s it!  You have balanced your account!

*Murphy-Wall State Bank and Trust Company does not have any affiliation with these programs, nor specifically recommends the purchase and/or use of the products and services mentioned above.  However, for our customer’s convenience, our digital banking service currently has an interface with Quicken.

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